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Monday, January 21, 2013

A Smarter Idea For Closing A Budget Gap?

At the close of the City-County Council Committee's Administration & Finance Committee meeting at which members of the committee had just unanimously voted to raise taxes on car rentals and ticketed admissions to public events, Councilor Pamela Hickman posed an interesting question to the public: "If anyone out there has a smarter idea of how to fill this budget gap, we are more than willing to listen to it? Please don't think that we haven't looked at many avenues . . . This is a very labored decision for us."
If you have any ideas you would like to share with the council, you won't be able to share them at a public meeting. This was the only meeting at which these two taxes, which will raise a combined $6.7 million annually, where public testimony could be provided. No public testimony will be permitted at next week's meeting of the full council when the two taxes will be voted upon. Nonetheless, we have some questions we would like Councilor Hickman and the other councilors who support these two new tax increases to answer.

First of all, if the purpose of these tax increases is to fill a budget gap, why is the council proposing tax increases that will give three out of every four dollars raised to the Capital Improvement Board? After all, it's the city-county budget, not the CIB's budget, that faces a structural imbalance of $46 million. The original council-approved budget vetoed by the mayor provided an additional $15 million for the city-county budget for public safety that would have been payable from the CIB's $65 million in cash reserves. Why are we giving millions more annually to the CIB, while asking other city-county agencies to cut their budgets by 5%?

Second, the members of the Administration & Finance Committee gave homework assignments to all of the representatives of the auto rental industry who had the audacity to testify against the proposed tax increase on auto rentals without having answers to all of their questions. It seems the Mayor and the council members have been telling the public not to worry about this tax increase because only out-of-town visitors paid the tax. When industry representatives contradicted that meme, councilors were visibly perturbed and began challenging their statistics as if they were just making them up and began demanding they provide the public more information about the taxes that are imposed upon them. Imagine. When CIB officials were asked the purpose of the millions in additional revenues, the answer was simply that it would be used for operations. Nobody asked if giving annual subsidies of $10 million a year to billionaire Herb Simon's Indiana Pacers, which was not included in the council-adopted budget, constitutes an operations expenditure.

Third, why isn't the council demanding answers from the Indiana Pacers about their need for annual subsidies to operate Banker's Life Fieldhouse? The council had plenty of questions for the Indianapolis Colts' executive who had the audacity to appear before the committee and testify against the admissions tax. Doesn't this tax just amount to a few bucks per ticket? Why wouldn't fans pay the extra money? Only people who don't actually have to pay for Colts tickets would ask that question because it already costs a family of four on average about $500 to attend one game. They also wondered why the Colts simply couldn't eat the cost of the tax increase. You are getting more revenues from broadcast rights from the NFL aren't you, Council President Maggie Lewis asked? Is she not similarly curious about the tens of millions of new revenues the Indiana Pacers receive under the new collective bargaining agreement the NBA entered into last year? Ms. Lewis is a voting member of the CIB which approved that additional $10 million to the Indiana Pacers. Did she pose that question to the Pacers?

Fourth, because these two new tax increases don't address the $46 million budget gap in the city-county budget, we ask what additional tax increases the council plans to enact. We understand that your esteemed council president, who gets two free tickets to every Colts game courtesy of the CIB, agreed to the elimination of the homestead property tax credit in next year's budget as part of her agreement with the Mayor. That was a tax increase the Mayor proposed last year that was rejected by the council. The Mayor and the council's leadership are also asking the General Assembly for permission to raise our local income taxes to finance a new mass transit boondoggle that will take effect next year if approved by voters at a special election. It will cost $1 million to pay for that special election, but we suppose you've got good answers for where that money will come from as well. What other tax increases do you have planned for the public that you haven't told us about?

These are all questions the public would like to see answered. We're more than a little bit concerned that these new CIB tax revenues, which nobody bothered to justify with real spending needs, is in actuality part of a plan to finance a new stadium at the site of the former Market Square Arena site for the benefit of one of the Mayor's largest campaign contributors, who just coincidentally announced this week that he had landed a new professional franchise for the city, and that his plans include a permanent new stadium downtown. He's scouted the country and his stadium of choice is one like Kansas City built that has a price tag of $200 million. If you've decided behind closed doors that you're going to finance this new public stadium, don't you owe the public the transparency to tell us why you're really raising our taxes. Don't tell us you're raising our taxes to pay for public safety when the money is really going to fund this city's number one priority--professional sports. We won't hold our breath waiting for any straight answers from any of you. After all, we never get straight answers from you.

UPDATE: Councilor Angela Mansfield advises me that there will be public testimony at next Monday's council meeting on the proposed tax increases. She also clarified that she opposed the auto rental tax and will not be voting for it when it comes for a full vote. A couple of councilors had expressed reservations about the tax increases as well. Councilor Simpson has reservations about the auto rental tax, and Councilor Jack Sandlin had reservations about the admissions tax, but both voted to send the measures to the full council for a vote.

We're broke, but it is fine to waste a million dollars (taxpayers)on a special election so that billions of dollars of contracts (Friends of Ballard (FOB)) can let and bonds can be issued (taxpayers) to fund a transit system whose chief proponents will never ride (except when they have free tickets to Colts or Pacers games).

And they are going to get away with it again - while wringing their hands about what to do about the current and future budgetary problems that they just exacerbated.

There is no $46 million gap. That talk was before the income tax error was discovered by the State. The taxes we should have received for this year, will instead be used for next year's budget.

There is no discussion of the fact that the budget squeeze will soften as the economy improves, and does not need a long term, new revenue stream; rather it requires penny pinching to make it through the hard times.

We are, in fact, sitting on $80 million purportedly to keep our bond rating. It was said a couple of years ago when it was created, that it was only needed for a couple of years. Either come clean about our ability to pay our debts, (and stop adding new debt with new TIF districts), or release a couple of million to tide us over.

The new tax money is not earmarked for recruit classes - which was the reason the Council put a $15 million PILOT on the CIB. $11 million was to substitute for keeping the homestead credit and the rest for a recruit class.

Both the Mayor's budget and the Council's budget was equally balanced. So, why raising taxes, the third alternative, is superior to 'getting through' until the economy improves, is beyond rational thought.

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